One For The Money

• Who Wants to be a Millionaire [01:26]
• USA has a lot of millionaires [03:23]
• The Abundance Mentality [05:49]
• Prerequisites to becoming a Millionaire: The Success Sequence [07:28]
• What you should do [09:20]
• What happens to those that didn’t model the behaviors [14:13]

Years ago there was a hugely popular game show entitled Who Wants to Be a Millionaire. It captivated the American public. The television network ABC first launched the American version of the game show in 1999 and it became the highest-rated television show later that year, and has since had 21 seasons with several different celebrities serving as the game show host.

In 2023 here in the US of A, we have never had more millionaires than we do right now. 

Based on the latest estimates from the Federal Reserve there are around 16 million American households with a net worth of $1 million or more. That’s up from fewer than 10 million millionaire families in 2019.

While saving and investing are important behaviors to cultivate on the path to becoming financially independent (or a millionaire) there are prerequisites behaviors that must be mentioned. In an opinion piece in the WSJ by the wonderful Jason Riley, he emphasized the success sequence. That sequence is often credited to research done by Brookings Institution scholars Isabel Sawhill and Ron Haskins, though others have made similar observations. The success sequence is simply this:

If you finish high school, get a job, and get married before having children, you have a 98% chance of not being in poverty.

Recently Dr. Melissa Kearny, MIT-trained economist wrote a book entitled The Two-Parent Privilege.  In it she shared the story of how declining marriage rates are driving many of the country’s biggest economic problems and how the greatest impacts of marriage are, in fact, economic: when two adults marry, their economic and household lives improve, offering a host of benefits not only for the married adults but for their children. A summary of the book notes that For many, the two-parent home may be an old-fashioned symbol of the idyllic American dream. But The Two-Parent Privilege makes it clear that marriage, for all its challenges and faults, maybe our best path to a more equitable future.

Here are a few additional behaviors I would add:

Not borrowing money when you don’t have to. Just because you are approved for a loan doesn’t mean you can afford the thing you are trying to purchase. Don’t confuse approval with proof that you can afford the car or whatever it is you are trying to buy with borrowed money. If a person has a new luxury car they are wasting money and most who have them don’t have the money to waste. You should only borrow money to buy an house and pay for some college. And even with college there are many reasons not to borrow money to pay for college. See episodes 15 and 16 of this podcast for more information.

Another thing to note, just because a person has a high FICO score it doesn’t necessarily mean they have made smart money choices but simply the fact that they have shown the ability to borrow money and pay it back consistently. One’s personally accrued net worth and the savings rate is a far better determiners of smart money choices.

In the end, it all comes down to discipline. Everything changes financially when you are living on a paycheck from 3 months ago. If a person needs their upcoming paycheck to pay their expenses they don’t have the mindset to be financially free or a millionaire. Instead, they have the mindset to struggle financially. 

That may sound like a harsh thing to say to those who are suffering to make ends meet. But the principles required to lift their self out of their current circumstances can be found in their daily choices.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• https://awealthofcommonsense.com/2023/11/how-to-become-a-millionaire/
• https://www.wsj.com/us-news/never-mind-the-1-mini-millionaires-are-where-wealth-is-growing-fastest-b1dd2ee7
• https://press.uchicago.edu/ucp/books/book/chicago/T/bo205550079.html
• https://www.wsj.com/articles/the-biggest-root-cause-of-crime-is-fatherlessness-single-motherhood-5cdfe763
• https://ourworldindata.org/millennium-development-goals